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The great airline bill scam & other matters of note

Jul 31st 2014

Airline blues

Residents of Boca Raton and Delray Beach tend to fly a lot. Fortunately, we can pick between flights at airports in Fort Lauderdale and West Palm Beach. Not too much farther away, there’s Miami International if you need a gateway to the Caribbean and South America.

So news out of Congress about airline pricing matters a lot to this area. Yet there has been comparatively little reporting about a bill that once seemed dead—for good reason—yet suddenly passed the House this week.

H.R. 4156 is called the Transparent Airfares Act, but a more accurate name would be the Deceptive Airfares Act. It would change the way airlines can advertise ticket prices, and consumer groups say that change would enable airlines to hide the truest cost of a flight, sometimes until it’s too late for a buyer to change his or her mind.

In 2012, the U.S. Department of Transportation required airlines to post the full price of a ticket—including taxes and fees. Airlines have complained about the rule ever since, claiming that they should be able to advertise only the cost of the flight. Consumer groups respond, correctly, that only by knowing the full cost early on can passengers make an informed choice. This is especially true with the rise of discount carriers like Broward County-based Spirit that rely so heavily on fees for everything from how you book your flight to where you want to sit to how much and what kind of luggage you bring.

To secure congressional approval for their preferred method of advertising prices, the airline industry developed a clever strategy. The carriers—Big Business—have pressured Republicans. The unions—Big Labor—have pressured Democrats. The result is one of the rare moments of bipartisanship in an otherwise dysfunctional House. How good to know that Congress can come together to work against the public interest.

Sponsoring the bill are three Democrats and two Republicans. All are chairmen of committees and subcommittees that are supposed to oversee the airline industry. The bill passed the House this week on a voice vote, which is the first tipoff that the bill isn’t good for consumers. Voice votes allow lawmakers to avoid accountability for support of controversial legislation.

I checked with the offices of Reps. Lois Frankel and Ted Deutch, Democrats who represent most of the Boca-Delray area. Her press aide said Frankel signed on as a co-sponsor. I asked why Frankel supported a bill that had drawn so much criticism from consumer groups. The press aide provided this quote: “Consumers have a right to know what portion of their airfare is government and taxes and fees.” What about airline fees? No response. Despite an email and a phone call, I got no answer from Deutch’s office as to whether he supports the bill.

A press release from the House Transportation and Infrastructure Committee claims that the legislation would “return transparency to U.S. airline fare advertising” by allowing carriers to “state the base airfare and separately disclose any government imposed taxes and fees and total cost of travel.” The key word is “separately,” which could allow carriers to disclose deceptively.

Example: I checked flights to Baltimore, where my daughter and her fiancé live, on Southwest and Spirit. With Southwest, it’s all clear before you buy. Two clicks, and you get a bottom line. A nearby link provides a breakdown of the taxes and fees. Transparent.

With Spirit, you are told the cost of the flight and, as the airline puts it, the government’s share. Deep into making the reservation, though, there is no mention of what fees the airline might impose. That makes it hard to compare which carrier offers the better value.

Rep. Peter DeFazio, D-Ore., said in the House press release, “Consumers haven’t been getting the whole picture of what an airline ticket pays for. The Transparent Airfares Act is a simple fix to give people better information.” Simple? No. Better? Also no.

Airlines want fliers to think government is to blame for any price increases because of government-imposed fees. Indeed, the post-9/11 Transportation Security Administration fee did just go up, and much of the money will go, not toward security, but toward deficit reduction. Congress, though, made that happen in the 2013 budget deal. Again, I have no problem with a rule that requires airlines to list all added costs up front—as long as the airlines’ own fees are listed, too, and in a way that makes comparison easy.

If this bill would help consumers, why do consumer groups oppose it? Why do advocates for business travelers oppose it? Christopher Elliott is a syndicated travel columnist who takes complaints from people who have received poor service from airlines, hotels and rental car companies. Often, a call from Elliott is enough to secure a delayed refund or some other deserved make-good.

Writing in USA Today, Elliott blasted the airfares bill. He quoted Paul Hudson, president of FlyersRights.org, as saying the legislation is “all about making airfares less transparent. The name of the bill is just the start of the false advertising.” Elliott quoted Kevin Mitchell, chairman of the Business Travel Coalition, as saying, “It’s a terrible bill on every level.”

Fees make up an increasing share of airline revenue. According to news reports, ancillary fees amount to almost 40 percent of Spirit’s revenue. Airline pricing thus can make quantum physics look easy. Numerous websites offer travelers ways to navigate through the fees, but why should booking a flight be so hard—especially when you do it yourself online?

The airlines’ laughable argument is that the Transparent Airfares Act will make people more likely to fly. In fact, Americans would be more likely to fly if booking were easier. Deceptive pricing is just one more example of bad service—from airlines and from your elected representatives.

Delray reports rollback rate

On Tuesday, I reported on the planned tax rates for Boca Raton and Delray Beach, and explained why keeping the tax rate the same or even lowering it marginally still could mean higher taxes.

Property values for most people are up. What you pay is the tax rate multiplied by the property value. To keep taxes the same, cities would have to impose what the state calls the “rollback rate.” Boca Raton acknowledges that even though its proposed tax rate is unchanged, the rate is nearly 5 percent higher than the rollback rate.

Delray Beach staffers did not include the rollback rate in their memo to commissioners when they set the maximum tax rate for next year. A city spokesman has since told me the rollback rate, and it’s nearly 15 percent lower than the current proposed tax rate. So Delray Beach taxpayers will pay proportionally more than those in Boca unless the rate changes before the budget is approved.

Kids in cars

Last week, Children’s Services Council of Palm Beach County gathered speakers for a forum on the topic of children left in hot cars, sometimes to die. Speakers included child safety advocates, law enforcement representatives and one Florida father who left his 17-month-old daughter in the car at his workplace rather than take her to day care. The toddler died.

The problem is real enough. Florida ranks second in heatstroke deaths involving children. It is a felony to leave a child in a car if the child dies or is seriously injured, though I can’t recall any parents who have done time.

Now, though, someone has given this problem a name: Forgotten Baby Syndrome. Seriously? A syndrome in most cases is a medical condition, one that if often beyond the control of the person. Think Down Syndrome. Parents who don’t remember that they have children in their car have something, but it isn’t beyond their control. Call it what it is: Stupid Parent Syndrome.

The Zillow-Trulia Effect

I began this post with a national issue that matters a lot in South Florida. Here’s another:

Zillow and Trulia, which control roughly half of all online real estate traffic, will merge. Zillow is the buyer. Depending upon which “expert” you read, the bigger Zillow will speed up big changes in how homes are bought and sold or just make for a more profitable online giant that is a new part of buying and selling but won’t eliminate the need for Realtors representing both the buyer and seller.

Bill Bathurst is a Realtor in Delray Beach. “I don’t know,” he says, “if the merger will affect how Zillow interacts with real estate agents.” He notes, correctly, that the big problem with Zillow is accuracy. Buyers can get a “Zestimate” of what their home is worth, but reports have shown that the estimates can be inflated. “You hear ‘Keep Calm and Don’t Trust Zillow,’ ‘’ Bathurst said, invoking one of the many takeoffs on the British World War II poster “Keep Calm and Carry On.”

Bathurst also cited the recent example of an area condo listed on Zillow for $30,000. What the ad didn’t include, Bathurst said, was the $25,000 club fee that went with the condo. The sites have also been criticized for advertising homes that already had been sold.

Realtors have had a wary relationship with Zillow, which sellers tend to favor, and Trulia, which buyers tend to favor. Realtors like the leads the online sites might provide, but a larger Zillow and its competitors might seek to marginalize or eliminate Realtors from the buying and selling of homes.

Would that help or hurt the South Florida real estate market? As with airline tickets, accuracy and disclosure are vital. Realtors still control the Multiple Listing Service (MLS) that offers the most information, and the National Association of Realtors maintains its own site: realtor.com, which it claims to be the most reliable. The new Zillow, Bathurst said, also could be a way to “extort more money from Realtors,” who advertise on Zillow and Trulia.

People gripe about real estate commissions, but there’s only so much credible guidance an online site now can provide. At this point, Zillow’s purchase of its leading competitor makes sense mostly for Zillow.

Randy Schultz was born in Hartford, Conn., and graduated from the University of Tennessee in 1974. He has lived in South Florida since then, and in Boca Raton since 1985. Schultz spent nearly 40 years in daily journalism at the Miami Herald and Palm Beach Post, most recently as editorial page editor at the Post. His wife, Shelley, is director of The Learning Network at Pine Crest School. His son, an attorney, and daughter-in-law and three grandchildren also live in Boca Raton. His daughter is a veterinarian who lives in Baltimore.